INCOME TAX ASSESSMENT ACT 1936 (ARCHIVE)

PART IIIAA - FRANKING OF DIVIDENDS  

Division 2 - Franking surplus or deficit  

Subdivision C - General provisions on franking debits  

SECTION 160AQCB   DIVIDEND STREAMING ARRANGEMENTS  

160AQCB(1)   [Franking debit where scheme dividend paid]  

Where:

(a) on a particular day after 30 June 1990, a company (in this subsection called the ``debit company'' ) pays an unfranked dividend or a partly franked dividend (which unfranked dividend or partly franked dividend is in this subsection called the ``scheme dividend'' ) to a shareholder in the debit company; and

(b) the scheme dividend was paid:

(i) under a dividend streaming arrangement in relation to the debit company; and

(ii) in substitution, in whole or in part, for the payment, or proposed payment, to the shareholder or to another shareholder, of one or more franked dividends (in this subsection called the ``substituted dividends'' ), being dividends whose actual or proposed franking percentage exceeds the franking percentage of the scheme dividend;

there arises on that day:

(c) a class A franking debit of the debit company equal to the amount worked out using the following formula, as reduced by the amount (if any) of the class A franking debit of the company arising under section 160AQB in respect of the payment of the scheme dividend:

Scheme dividend   ×

Substituted class A franking       percentage

where:

`` Scheme dividend '' means the amount of the scheme dividend;

`` Substituted class A franking percentage '' means the actual or proposed class A franking percentage, or the greatest actual or proposed class A franking percentage, of the substituted dividends; and

(d) a class B franking debit of the debit company equal to the amount worked out using the following formula, as reduced by the amount (if any) of the class B franking debit of the company arising under section 160AQB in respect of the payment of the scheme dividend:

Scheme dividend   ×

Substituted class B franking       percentage

where:

`` Scheme dividend '' means the amount of the scheme dividend;

`` Substituted class B franking percentage '' means the actual or proposed class B franking percentage, or the greatest actual or proposed class B franking percentage, of the substituted dividends; and

(e) a class C franking debit of the debit company equal to the amount worked out using the following formula, as reduced by the amount (if any) of the class C franking debit of the company arising under section 160AOB in respect of the payment of the scheme dividend:

Scheme dividend   ×

Substituted class C franking       percentage

where:

Scheme dividend means the amount of the scheme dividend.

Substituted class C franking percentage means the actual or proposed class C franking percentage, or the greatest actual or proposed class C franking percentage, of the substituted dividends.

160AQCB(2)   [Franking debit where scheme bonus shares issued]  

Where:

(a) on a particular day after 30 June 1990, a company (in this subsection called the ``debit company'' ) issues one or more tax-exempt bonus shares (in this subsection called the ``scheme bonus shares'' ) to a shareholder in the debit company; and

(b) the scheme bonus shares were issued:

(i) under a dividend streaming arrangement in relation to the debit company; and

(ii) in substitution, in whole or in part, for the payment, or proposed payment, to the shareholder or to another shareholder, of one or more franked dividends (in this subsection called the ``substituted dividends'' );

there arises on that day:

(c) a class A franking debit of the debit company equal to the actual or proposed class A franked amount, or the sum of the actual or proposed class A franked amounts, of the substituted dividends; and

(d) a class B franking debit of the debit company equal to the actual or proposed class B franked amount, or the sum of the actual or proposed class B franked amounts, of the substituted dividends; and

(e) a class C franking debit of the debit company equal to the actual or proposed class C franked amount, or the sum of the actual or proposed class C franked amounts, of the substituted dividends.

160AQCB(3)   [Franking debit where linked dividend paid]  

Where:

(a) on a particular day after 30 June 1990, a company (in this subsection called the ``linked company'' ) pays an unfranked dividend or a partly franked dividend (which unfranked dividend or partly franked dividend is in this subsection called the ``linked dividend'' ) to a shareholder in the linked company; and

(b) the linked dividend was paid:

(i) under a dividend streaming arrangement in relation to another company (in this subsection called the ``debit company'' ); and

(ii) in substitution, in whole or in part, for the payment, or proposed payment, by the debit company of one or more franked dividends (in this subsection called the ``substituted dividends'' ) to a shareholder in the debit company;

there arises on that day:

(c) a class A franking debit of the debit company equal to the amount worked out using the following formula:

Linked dividend   ×

Substituted class A franking       percentage

where:

`` Linked dividend '' means the amount of the linked dividend;

`` Substituted class A franking percentage '' means the actual or proposed class A franking percentage, or the greatest actual or proposed class A franking percentage, of the substituted dividends; and

(d) a class B franking debit of the debit company equal to the amount worked out using the following formula:

Linked dividend   ×

Substituted class B franking       percentage

where:

`` Linked dividend '' means the amount of the linked dividend;

`` Substituted class B franking percentage '' means the actual or proposed class B franking percentage, or the greatest actual or proposed class B franking percentage, of the substituted dividends; and

(e) a class C franking debit of the debit company equal to the amount worked out using the formula:

Linked dividend   ×

Substituted class C franking       percentage

where:

Linked dividend means the amount of the linked dividend.

Substituted class C franking percentage means the actual or proposed class C franking percentage, or the greatest actual or proposed class C franking percentage, of the substituted dividends.

160AQCB(4)   [Class B franking debit where franked dividends paid]  

Where:

(a) a company (the debit company ) pays, on a particular day after 30 June 1990 and before the day on which the class C conversion time of the company occurs, one or more franked dividends (in this subsection called the ``scheme dividends'' ) to one or more shareholders in the debit company; and

(b) the scheme dividends were paid:

(i) under a dividend streaming arrangement in relation to the debit company; and

(ii) in substitution, in whole or in part, for the payment, or proposed payment, by another company of one or more unfranked dividends (in this subsection called the ``substituted dividends'' ) to one or more shareholders in that other company;

there arises on that day a class B franking debit of the debit company equal to the sum of the following amounts:

(c) to the extent that the substituted dividends comprise the whole or a part of a common issue of shares covered by paragraph (c) of the definition of ``dividend'' in subsection 6(1) - the sum of the actual or proposed amounts of the dividends to which that common issue relates;

(d) to the extent that the substituted dividends:

(i) do not consist of shares issued by the other company; and

(ii) comprise the whole or a part of a common series of distributions covered by paragraph (a) of the definition of ``dividend'' in subsection 6(1) ;

the sum of the actual or proposed amounts of the dividends to which those distributions relate;

(e) to the extent that paragraph (d) of this subsection does not apply and the substituted dividends comprise the whole or a part of a common series of credits covered by paragraph (b) of the definition of ``dividend'' in subsection 6(1) - the sum of the actual or proposed amounts of the dividends to which those credits relate.

160AQCB(4A)   [Class C franking debit where franked dividends paid]  

If:

(a) a company (the debit company ) pays, on a particular day on or after the day on which the class C conversion time of the company occurs, one or more franked dividends (the scheme dividends ) to one or more shareholders in the debit company; and

(b) the scheme dividends were paid:

(i) under a dividend streaming arrangement in relation to the debit company; and

(ii) in substitution, in whole or in part, for the payment, or proposed payment, by another company of one or more unfranked dividends (the substituted dividends ) to one or more shareholders in that other company;

there arises on that day a class C franking debit of the debit company equal to the sum of the following amounts:

(c) to the extent that the substituted dividends comprise the whole or a part of a common issue of shares covered by paragraph (c) of the definition of dividend in subsection 6(1) - the sum of the actual or proposed amounts of the dividends to which that common issue relates;

(d) to the extent that the substituted dividends:

(i) do not consist of shares issued by the other company; and

(ii) comprise the whole or a part of a common series of distributions covered by paragraph (a) of the definition of dividend in subsection 6(1) ;

the sum of the actual or proposed amounts of the dividends to which those distributions relate;

(e) to the extent that paragraph (d) of this subsection does not apply and the substituted dividends comprise the whole or a part of a common series of credits covered by paragraph (b) of the definition of dividend in subsection 6(1) - the sum of the actual or proposed amounts of the dividends to which those credits relate.

160AQCB(5)   [Interpretation]  

A reference in this section to a dividend streaming arrangement includes a reference to a dividend streaming arrangement entered into before the commencement of this section.